E-News from KPMG’s EU Tax Centre

KPMG’s EU Tax Centre compiles a regular update of EU and international tax developments that can have both a domestic and a cross-border impact, with the aim of helping you keep track of and understand these developments and how they can impact your business. Today’s edition includes updates on:

• CJEU referral: CJEU referral on the compatibility with EU law of the Polish exit tax for individuals
• CJEU referral: CJEU to decide on the compatibility of final withholding taxes with EU freedoms
• OECD: Updated outcomes of the transitional peer review process (Pillar Two)
• Ireland: Updated Pillar Two guidance
• Mauritius: Finance Act 2025 published in the Official Gazette including minimum taxation rules
• Netherlands: Updated guidance on ATAD interest-deduction limitation rules
• Poland: Updated draft amendments to Polish Mandatory Disclosure Rules
• United Kingdom: Pillar Two guidance published
• Czechia (court decision): Supreme Administrative Court clarifies beneficial ownership test for royalty withholding tax
• Portugal (court decision): Supreme Court ruling on interest on refunds for withheld taxes on dividends

CJEU rules that the Italian regional tax on productive activities is incompatible with the PSD

On August 1, 2025, the Court of Justice of the European Union (CJEU or the Court) rendered its decision in the joined cases C-92/24 to C-94/24. The cases concern the compatibility of the Italian regional tax on productive activities (IRAP) with the prohibition on taxing distributed profits in the hands of the recipient (i.e., the parent company) under Article 4 of the Parent-Subsidiary Directive (PSD or Directive).

Under Italian law, Italian companies are subject to a regional tax on productive activities (imposta regionale sulle attività produttive - IRAP), levied at a rate that can vary by region. The taxable base depends on the taxpayer's business activity. Higher rates apply to banks and other financial intermediaries. Furthermore, for banks and financial intermediaries, the IRAP taxable base includes: i) intermediation margin reduced by 50 percent of the dividends; ii) 90 percent of depreciation costs related to fixed tangible and intangible assets; iii) 90 percent of other administrative expenses; iv) net value adjustments and write-backs for credit risk, under certain conditions.

The plaintiff in the joined cases at hand was an Italian bank, that received dividend income from subsidiaries based in Ireland, Luxembourg, and Spain. Since the conditions of Article 5 of the PSD were met, the subsidiaries did not withhold tax at source. In line with the Italian implementation of the PSD, the plaintiff exempted 95 percent of the dividend income for corporate income tax purposes, including only 5 percent in its taxable base¹. However, due to its classification as a financial intermediary, the bank included 50 percent of the dividends in its IRAP taxable base, which was taxed at a rate of 5.57 percent. The plaintiff subsequently requested a refund of the IRAP paid, arguing that requiring 50 percent of dividends – otherwise meeting the criteria set out under the PSD, to be included in the IRAP taxable base was contrary to Article 4 of the PSD. The Italian tax authorities rejected the refund claim on the grounds that the Directive only covered corporate income taxes and was not applicable with respect to the IRAP. Following several legal proceedings initiated by the plaintiff, the case was referred to the CJEU.

The referring court questioned whether Article 4 of the PSD precludes national legislation that, under the exemption system, allows a Member State to tax more than 5 percent of dividends received by financial intermediaries (as parent companies) from subsidiaries in other Member States, particularly when such taxation occurs through a tax that is not corporate income tax (like IRAP) but nevertheless includes those dividends in its assessment base.

The Court held that Article 4 of the PSD prohibits a Member State applying the exemption system from taxing more than 5 percent of dividends received from subsidiaries in other Member States, even where such taxation is imposed through a tax that is not corporate income tax but nevertheless includes those dividends (or a fraction thereof) in its assessment base.

For more details on the CJEU decision, please refer to our Euro Tax Flash Issue 567.

Updated outcomes of the transitional peer review process (Pillar Two)

On August 18, 2025, the OECD released an updated version of the central record providing the outcome of the Pillar Two transitional peer review process current as at the publication date.

The registry was initially published on January 15, 2025, and subsequently updated on March 31, 2025, identifying jurisdictions that have been granted Transitional Qualified Status concerning the local implementation of the Domestic Minimum Top-up Tax (DMTT) and Income Inclusion Rule (IIR).

According to the update, the following jurisdictions have now been awarded transitional qualified status:

• IIR regimes awarded transitional qualified status since previous update: Gibraltar, Indonesia, Isle of Man, Jersey, Malaysia, New Zealand, North Macedonia, Poland, Portugal, Singapore, South Africa, Switzerland and Thailand.
• DMTT regimes awarded transitional qualified status and considered eligible for the QDMTT Safe Harbour since previous update: Gibraltar, Indonesia, Isle of Man, Japan, Malaysia, North Macedonia, Poland, Portugal, Singapore, South Africa, Thailand and United Arab Emirates.

Note that the Polish IIR and DMTT apply for financial years starting on or after December 31, 2024, unless an irrevocable election is made by the taxpayer to apply the rules from January 1, 2024. In this context, the central registry notes that an Elective IIR and DMTT for 2024 can be recognized as qualified under certain circumstances, including that the IIR and DMTT will not be elective in any other year. In addition, it is noted that an MNE Group cannot claim the QDMTT Safe Harbour if it is not subject to the Elective DMTT.

According to the release, the central record will be updated on a regular basis and the fact that a jurisdiction is not included in the list does not mean that its legislation is not qualified, but rather that the process has not yet been initiated or completed for that legislation. 

For previous coverage, please refer to E-News Issue 210.

List of signatories of the GIR MCAA published

On August 26, 2025, the OECD published a list of jurisdictions that have signed the GloBE Information Return Multilateral Competent Authority Agreement (GIR MCAA).

The GIR MCAA provides a framework for jurisdictions to automatically exchange Pillar Two information filed by in-scope groups as part of the GIR.

As a reminder, the GIR MCAA is relevant in the context of Article 8.1.2 of the Model Rules, which provides the option for the Ultimate Parent Entity (UPE), or a Designated Filing Entity appointed by the MNE Group, to file the GIR on behalf of other group members. In that case, other group members are discharged from the requirement to file a GIR provided that a Qualifying Competent Authority Agreement is in place between the jurisdiction in which the Filing Constituent Entity is located and the jurisdiction in which the respective Constituent Entity is located.

The list of signatories includes Austria, Belgium, Denmark, France, Ireland, Italy, Japan, South Korea, Luxembourg, the Netherlands, New Zealand, Portugal, Slovakia, Spain, and the UK.

Please note that – within the EU – Council Directive (EU) 2025/872 (DAC9) provides for a framework to facilitate the exchange of Pillar Two information. EU countries are required to transpose the Directive into domestic legislation by December 31, 2025, with the first exchange of information between EU countries taking place at the latest six months after the filing of the first Top-up tax information return. However, DAC9 does not address exchanges between EU and non-EU jurisdictions. For this, EU countries need to sign the GIR MCAA and activate the respective exchange relationships. 

For more information, please refer to the OECD Pillar Two materials and Euro Tax Flash Issue 551.

Decision on Pillar One Amount B implementation

On July 23, 2025, the French Tax Authorities published guidelines regarding the implementation of Amount B under Pillar One. Amount B generally aims to simplify and streamline the application of the arm’s length principle to baseline marketing and distribution activities and can be elected for application for accounting periods starting on or after January 1, 2025.

Key takeaways include:

• France has opted to not apply Amount B at present. However, the tax authorities stated their commitment to respecting the result obtained when a low-capacity country applies amount B. According to the principles of Amount B, France will consider Amount B as an acceptable approximation to the arm's length principle and eliminate all double taxation that arise from applying Amount B, if certain conditions are met.
• In order for France to accept Amount B, the following three cumulative criteria must be fulfilled: i) the jurisdiction is a low-capacity country³; ii) the jurisdiction has a bilateral tax treaty with France in force; and iii) the other jurisdiction has elected to apply Amount B to distributors operating in its market. It should be noted that as of June 30, 2025, no jurisdictions meet these conditions.
• Until further notice, this decision is applicable to tax years beginning on or after January 1, 2025.

For more information on Amount B, please refer to a report by KPMG International.

Updated Pillar Two guidance

On July 31, 2025, Irish Revenue published updated guidance on the application of the Irish minimum taxation rules (Pillar Two). Key changes were made to the sections covering:

• the treatment of insurance investment entities;
• the treatment of intra-group financing arrangements in the context of the determination of GloBE Income;
• the treatment of post-filing adjustments and tax rate changes in the context of the determination of Covered Taxes (including the treatment of tax expense relating to pre-transition fiscal years);
• the application of the transitional Country-by-Country (CbyC) Reporting Safe Harbour, as it relates to the calculation of simplified covered taxes relating to pre-transition fiscal years;
• the treatment of Constituent Entities joining and leaving MNE groups or large-scale domestic groups, as it relates to mergers;
• the treatment of Joint Ventures, as it relates to interactions with the UTPR, scope of application, unaligned accounting periods and the domestic top-up tax.

For previous coverage, please refer to E-News Issue 207.

Online Pillar Two registration platform launched

On August 14, 2025, Irish Revenue launched the online platform related to the registration for Irish minimum taxation purposes (Pillar Two). Key takeaways include:

• In-scope entities are required to register within 12 months after the last day of the first fiscal year during which an entity qualifies as a relevant entity (e.g. parent entity subject to the IIR, entity subject to the UTPR, or entity liable to the QDTT).
• Finance Act 2024 clarified that the first deadline for registration for IIR, UTPR or QDTT purposes will be no earlier than December 31, 2025.
• Registration can be made on the Revenue Online Service (ROS) website and requires certain entity and group-specific information, including:
  • indication whether the entity qualifies as the UPE of the group;
  • indication whether the entity will file the GIR directly or if a designated local entity or an entity in another jurisdiction will handle the GIR filing;
  • indication of the initial fiscal year in which the group falls in scope of Pillar Two;
  • indication of whether the entity chooses to be part of a QDTT group and if it acts as the QDTT group filer.
• Failure to register may result in a penalty of EUR 10,000.

For more information, please refer to a report prepared by KPMG in Ireland. For previous coverage on the Irish Pillar Two implementation, please refer to E-News Issue 212.

Bill on various tax amendments enacted

On August 1, 2025, the Italian Parliament published Law Decree No. 84/2025 in the Official Gazette. The new Law Decree modifies the tax loss carry-forward rules for companies undergoing changes in control and primary business activity, allowing tax losses to be carried forward up to the certified economic value of net assets, subject to certain reductions. Additionally, the Controlled Foreign Company (CFC) rules now include a minimum 15 percent effective tax rate test for foreign subsidiaries, with clarified methods for attributing Qualified Domestic Minimum Top-up Tax (QDMTT) to CFCs.

Lastly, the deadline for hybrid mismatch penalty protection documentation has been extended to October 31, 2025, covering fiscal years 2020 to 2024.

The law entered into force on August 2, 2025. For more information on the amendments introduced with the law, please refer to E-News Issue 214.

Guidance issued on GloBE Information Return (GIR) notifications

On August 7, 2025, the Italian Tax Authorities published a protocol in the Official Gazette, approving the notification form and related instructions for groups in scope of the Italian Pillar Two legislation to inform the Italian tax authorities on the identity and location of the entity submitting the GIR on behalf of other group members, as well as defining the methods of transmission.

The protocol follows the decree published on March 6, 2025, which introduced both a GIR notification requirement and the related notification template. The notification needs to be filed no later than 15 months after the end of the fiscal year (18 months for the transitional year)

Any updates and corrections to the form and instructions will be published in the relevant section of the Italian Tax Authorities website and will be communicated accordingly.

For previous coverage, refer to E-News Issue 208.

Online portal launched for Multinational Corporate Income Tax registration

In August 2025, the Jersey government launched the online portal for purposes of registering for the new Multinational Corporate Income Tax (MCIT) along with frequently asked questions to assist MNE groups with the registration process.

The MCIT legislation was approved by the Jersey States Assembly on October 22, 2024, and applies for fiscal years starting on or after January 1, 2025. The MCIT is a new corporate income tax at a rate of 15 percent, which applies to Jersey Constituent Entities of in-scope MNE groups. The MCIT legislation generally follows the Pillar Two Model Rules, such that the amount of MCIT payable in Jersey broadly aligns with the amount of tax that would be due under the GloBE Rules. Note, however, that the MCIT has not been confirmed as a QDMTT under the transitional OECD peer review (see above).

Key takeaways with respect to the registration requirements include:

• In-scope MNE groups are required to register for MCIT before the end of the first accounting period in which these criteria are met. As an example, an in-scope MNE group with an accounting period from January 1 to December 31 must register before December 31, 2025.
• Only the reporting entity or its appointed Pillar Two tax agent can register the MNE group on the portal.
• A reporting entity is defined as:
  • the UPE of the MNE Group (if located in Jersey),
  • a Jersey-based Intermediate Parent Entity (if the UPE is not in Jersey and there is only one Jersey-based Intermediate Parent Entity), or
  • a designated Jersey entity (if neither of the conditions above apply).

For further information, please refer to a report prepared by KPMG in the Crown Dependencies. 

Draft bill to implement DAC9 and additional changes to local minimum taxation rules (under Pillar Two)

On July 24, 2025, a draft bill was submitted to the Luxembourg Parliament. The bill aims to transpose the Council Directive (EU) 2025/872 (DAC9) and to incorporate the January 2025 OECD Administrative Guidance into the Luxembourg Pillar Two law along with additional technical amendments.

Key takeaways include:

• DAC9 implementation: the draft bill and the accompanying draft regulation clarify that in-scope groups should submit the Top-up tax information return in accordance with the standard template as provided in Annex VII of DAC9. The standard template closely follows the GIR template published by the OECD on January 15, 2025. The draft bill further clarifies that the exchange of received Pillar Two information will follow the dissemination approach as outlined in DAC9 to ensure that each country only receives the information they need based on their role in the MNE group. In addition, the bill confirms that Pillar Two information will be exchanged with all EU member states and with non-EU countries that have signed the GIR MCAA. Luxembourg signed the GIR MCAA on June 26, 2025 (see above). Note that the proposed amendments do not address any additional local registration and local return filing requirements. For more information on DAC9, please refer to Euro Tax Flash Issue 558.
• Amendments to align with January 2025 Administrative Guidance: the draft bill proposes the exclusion of certain categories of pre-regime deferred tax assets in accordance with the January 2025 Administrative Guidance on the application of article 9.1 of the GloBE Model Rules, including related amendments to the transitional CbyC Reporting Safe Harbour and QDMTT Safe Harbour. If voted into law, these amendments are expected to apply for fiscal years starting on or after December 31, 2023.

For more information, please refer to a report prepared by KPMG in Luxembourg.

Draft bill to implement DAC8

On July 24, 2025, the Grand Duchy of Luxembourg submitted a draft bill to the Luxembourg Parliament to implement the Council Directive (EU) 2023/2226 (DAC8) into domestic law. Key takeaways include:

• In accordance with DAC8, the bill would introduce rules on due diligence procedures and reporting requirements for crypto-asset service providers. In-scope crypto-asset service providers would be required to collect and verify information from EU clients, in line with specific due diligence procedures. Subsequently, certain information would be reported to the relevant competent authorities. This information would then be exchanged by the tax authorities of the recipient Member State with the tax authorities of the Member State where the reportable user is tax resident.
• In accordance with DAC8, the bill would expand the scope of the automatic exchange of advanced cross-border rulings issued to individuals (DAC3).
• In line with DAC8, the bill would require disclosures of cross-border arrangements (DAC6) to include a description of the relevant arrangements and any other information that could assist the competent authority in assessing a potential tax risk. Furthermore, the bill proposes modifications to the DAC6 law, reflecting the CJEU judgement from December 8, 2022 (see Euro Tax Flash Issue 497). This adjustment means that lawyers acting as intermediaries would no longer be obligated to inform other intermediaries, who are not their clients, about their reporting duties. However, they must still notify their own clients regarding DAC6 reporting obligations.
• The bill also includes penalties for failures to comply with the requirements of the legislation of up to EUR 250,000.

The Bill now needs to follow the usual legislative process such that changes may still occur during this process.

To comply with DAC8, the domestic legislation must be implemented by December 31, 2025, and the rules should be applied from January 1, 2026 (with some exceptions). For more information about DAC8, please refer to Euro Tax Flash Issue 553 . 

Finance Act 2025 published in the Official Gazette including minimum taxation rules

On August 9 2025, Mauritius published in the Official Gazette the Finance Act 2025 providing, amongst others, for the implementation of a 15 percent DMTT. The Finance Act follows the 2025-2026 budget announcement that were presented in June 2025 (please refer to E-News Issue 213).

Key takeaways include:

• DMTT timing: The bill introduces a DMTT that would apply to qualifying domestic group members of MNE groups that are in scope of Pillar Two. According to the bill, the DMTT applies in respect of the year of assessment commencing on July 1, 2025, and in respect of every subsequent year of assessment. It has been clarified that that this should mean that the DMTT will apply on income derived as from July 1, 2025, in the first year of assessment. The IIR and UTPR are not covered by the Act.
• DMTT design: The law aims to align with the GloBE rules but remains general in its current form, indicating that further details (e.g., detailed ETR and top-up tax liability calculation, application of safe Harbour provisions, etc.) will be clarified through subsequent regulations. However, the law already clarifies that cross-border taxes, such as CFC taxes, that would be allocated to domestic Constituent Entities under the regular GloBE rules, need to be excluded for Mauritius DMTT purposes. In addition, the law requires the DMTT to be determined based on information from financial statements prepared in accordance with the UPE’s Financial Accounting Standard, except where it is not reasonably practicable to use such accounts.
• DMTT registration: MNE groups in scope of DMTT must inform the Mauritius Revenue Authorities of the local designated person responsible for the filing of the DMTT return, within six months after the end of the fiscal year. This means that, for an MNE group with financial year end on March 31, 2025, the notification must be made by September 30, 2025.
• DMTT filing and payment: The local DMTT return needs to be filed within 15 months after the end of the fiscal year and at the same time pay any tax payable in accordance with the QDMT tax return. Failure to file the DMTT return and pay the related taxes will result in a penalty of five percent of the unpaid tax amount and 0.25 percent interest per month or part of a month until the return is submitted.

For more information on the DMTT as well as other measures in the Finance Act 2025, please refer to a report prepared by KPMG in Mauritius. 

Updated guidance on ATAD interest-deduction limitation rules

On July 29, 2025, the Dutch State Secretary for Finance published a new decree providing guidance on the operation of the interest-deduction rules that were implemented as part of the transposition of the Anti-Tax Avoidance Directive (ATAD).

Under those rules, the net borrowing costs (i.e., interest expenses less interest income) are generally limited to the higher of (i) 24.5 percent of tax-EBITDA, or (ii) EUR 1 million. The 24.5 percent rate applies to fiscal years beginning on or after January 1, 2025. Previously, the EBITDA-threshold was set at 20 percent (see E-News Issue 205).

Key takeaways from the updated guidance include:

• Clarifications regarding the term “interest”: The guidance provides clarifications on how certain types of expenses or income are treated for purposes of the interest deduction rules, including commitment fees, guarantee fees, penalty interest, statutory interest on late-paid liabilities, premiums or discounts arising on the issuance or transfer of bonds or other debt, results from hedging instruments (e.g. interest-rate swaps).
• Interaction with other interest deduction limitation rules: The guidance clarifies that interest that is deductible under another anti-base-erosion rule (e.g. earnings-stripping, hybrid-mismatch, CFC) still constitutes interest expense for the purpose of the ATAD interest limitation rule.
• Liquidation losses: The guidance clarifies that liquidation losses are not to be taken into account when determining the tax-EBITDA.
• Tonnage tax regime: Profits determined under the Dutch tonnage-tax regime (an optional tax system in the Netherlands allowing qualifying shipping companies to be taxed on a fixed notional profit based on their vessels’ net tonnage) are included in the tax-EBITDA, but the regime does not affect the EUR 1 million safe-harbor allowance.

The new decree applies from July 30, 2025, and replaces decree No. 2023-22492 of November 24, 2023.

2025 Tax Act enacted including minimum taxation rules

On June 26, 2025, the Nigeria Presidency signed into law the 2025 Nigeria Tax Act (NTA) introducing several tax reforms. Key takeaways from an international tax perspective include:

• Minimum taxation: The NTA introduces two top-up tax mechanisms similar to the OECD Model Rules, including:
  • a 15 percent minimum Effective Tax Rate is established for companies with a turnover exceeding NGN 20 billion (approximately EUR 11 million).
  • a 15 percent minimum Effective Tax Rate is established on foreign profits of a subsidiary of a Nigerian parent company part of an MNE group with a combined turnover of at least EUR 750 million or equivalent, when those profits are not taxed at an effective rate of 15 percent. This provision also applies to licensed entities within free trade zones, only in cases of sales made within the customs territory or if the entity belongs to an MNE group with a total turnover of at least EUR 750 million or its equivalent.
  • The law remains general in its current form, such that it is not fully compliant with the OECD standards. Further regulations are yet to be issued to provide more detail on how the rules will operate in practice (e.g., clarifications on how the ETR and top-up tax liability will be calculated).
• Controlled Foreign Corporation (CFC) Rules: CFC rules are introduced whereby if a foreign subsidiary of a Nigerian company retains profits that could have been distributed without negatively impacting its operations, those profits will be considered distributed and taxed in Nigeria.

The rules are expected to take effect for periods starting on January 1, 2026. 

For more information, please refer to a report on the Nigeria Tax Administration Act as well as a report on the Nigeria Tax Act prepared by KPMG in Nigeria.

Poland introduces changes to CIT, PIT, and ESG reporting requirements

On July 28, 2025 and August 6, 2025, respectively, several bills were published in the Polish Journal of Laws, including acts that modify the Corporate Income Tax Act (CIT), both CIT Act and Personal Income Tax Act (PIT) and the Accounting Act, with the aim of simplifying regulatory requirements.

Key takeaways include:

• Removal of public tax-strategy reports: The CIT amendment removes the obligation for the largest taxpayers (turnover above EUR 50 million or forming a tax capital group) to prepare and publish an annual tax strategy report. The new regulation came into force on August 7, 2025.
• Easing of investment incentive claw-back rules and reduced compliance for partnerships: The PIT and CIT amendments will soften claw-back provisions where a decision on support within the Polish Investment Zone (PSI) or a permit for activity in a Special Economic Zone (SSE) is revoked. The new CIT amendments - in Poland general partnerships are CIT taxpayers - will also narrow the requirement for general partnerships to file detailed information on their partners. These new provisions will apply from January 1, 2026.
• Postponement of ESG reporting obligations: An amendment to the accounting law transposes changes from the CSRD Directive (Corporate Sustainability Reporting Directive) into national law, postponing by two years the requirement for large entities (considered as second wave companies) small and medium-sized enterprises (SMEs) listed on regulated markets in the European Economic Area (considered as third wave companies) to report on the impact of their activities on environmental and social issues, as well as the effect of these factors on the entity’s development, results, and situation – so called sustainable development or environmental, social, and governance (ESG) reporting. The new regulation came into force on August 11, 2025. For more details on the delay in the implementation of EU legislation concerning corporate sustainability due diligence and reporting requirements, please refer to our previous E-News Issue 210.

For more details, please refer to a report prepared by KPMG in Poland.

Updated draft amendments to Polish Mandatory Disclosure Rules

On August 4, 2025, the Polish Ministry of Finance released an updated version of the draft bill to amend the Polish Mandatory Disclosure Rules (MDR) – for previous coverage, please refer to E-News Issue 207.

Note that, while the MDR provisions introduced in Poland incorporate the requirements of EU Directive 2018/822 (DAC6) into Polish law, the current legislation extends beyond the minimum requirements imposed by DAC6 to cover a wider scope of potentially reportable arrangements (i.e., including reporting requirements for domestic arrangements). The proposed amendments aim to further align the Polish MDR provisions with DAC6. 

Key proposed amendments include:

• Intermediaries: The distinction between primary (promoter) and secondary (supporter) intermediaries will be removed, along with MDR-2 reporting obligations (e.g., specific forms for supporters). Third country (non-EU) intermediaries will no longer be considered promoters, i.e., non-EU intermediaries will not have reporting obligations. However, non-EU users (relevant taxpayers) remain subject to Polish reporting rules.
• Scope of reporting obligations: Polish-specific hallmarks, including those tied to value thresholds, will be removed. Only arrangements with a cross-border element will be reportable. Reporting obligations for VAT arrangements will be abolished.
• Alignment of hallmarks with DAC6: Hallmarks will be updated to match DAC6, notably the B2 hallmark (concerning conversion of income category) will exclude references to “change in taxation principles” (often used as a supporting or even sole reporting basis).
• Legal Professional Privilege: The updated proposal includes changes in respect of the requirement for intermediaries, who are subject to legal professional privilege, to report arrangements to the Polish tax authorities and to notify other intermediaries of their reporting obligation under DAC6 (in accordance with the CJEU decision of December 8, 2022 – (see Euro Tax Flash Issue 497) and the respective amendments included in the EU Directive 2023/2226 (DAC8). It is proposed that legal counsel, attorneys, tax advisers and patent attorneys should be exempt from the obligation to report arrangements (both bespoke and marketable) and therefore only be required to inform their clients (but not other intermediaries) of their reporting obligation under DAC6.
• Main Benefit Test (MBT): The MBT definition will be aligned with DAC6.
• Penalties: The amendments would reduce the applicable fines from 720 to 240 daily rates (set by the court that takes into account the perpetrator's income, personal and family circumstances, financial situation and earning capacity) for failure to submit of MDR information and from 720 to 120 daily rates for late submission of MDR information. Certain specific sanctions are being removed altogether.
• MDR procedure requirement (promoters are obliged to implement internal MDR procedure in order to prevent incompliances with the MDR obligations) is being removed from the Polish law.

These changes are still under public consultation and subject to the legislative process. The amended MDR rules are planned to take effect in two stages: from January 1, 2026, and from July 1, 2026.

Form for Pillar Two notifications published

On August 11, 2025, the Romanian tax authorities published the final form for the Pillar Two notification “Notification regarding the declaration and payment of the domestic top-up tax” on its website.

Based on the Romanian minimum taxation law, the form must be used where taxpayers exercise the option to appoint a designated filing entity to declare and pay the domestic top-up tax on behalf of all Romanian Constituent Entities belonging to the same group. For calendar year taxpayers, the deadline for the designated filing entity to notify the Romanian tax authority was June 30, 2025. However, up until August 11, 2025, a final version of the notification form was not available for submission.

The notification form will need to be submitted electronically via the digital platform of the Romanian tax authorities.

For more information, please refer to E-News Issue 215 and a dedicated report prepared by KPMG in Romania. 

Consultation on draft bill to implement DAC8

On July 28, 2025, the Spanish Tax Agency published a consultation on a draft royal decree to implement the Council Directive (EU) 2023/2226 (DAC8) into domestic law. Key takeaways include:

• In accordance with DAC8, the bill would introduce rules on due diligence procedures and reporting requirements for crypto-asset service providers. In-scope crypto-asset service providers would be required to collect and verify information from EU clients, in line with specific due diligence procedures. Subsequently, certain information would be reported to the relevant competent authorities. This information would then be exchanged by the tax authorities of the recipient Member State with the tax authorities of the Member State where the reportable user is tax resident.
• In accordance with DAC8, the bill would require disclosures of cross-border arrangements (DAC6) to include a description of the relevant arrangements and any other information that could assist the competent authority in assessing a potential tax risk.

The consultation runs until September 16, 2025. To comply with DAC8, the domestic legislation must be implemented by December 31, 2025, and the rules should be applied from January 1, 2026 (with some exceptions). For more information about DAC8, please refer to Euro Tax Flash Issue 532 . 

Law on the protection of the value of the Turkish currency

On July 24, 2025, the Grand National Assembly of Türkiye (GNAT) published the law on the protection of the value of the Turkish currency and certain laws in the Official Gazette. Key takeaways include:

• Corporate income tax (CIT) incentive: Reduced corporate income tax rates of 10 percent under investment incentive certificates are now capped at a maximum of 10 years from the first year the incentive is applied. This marks a shift from previous rules where the duration was not explicitly limited. Among the areas that can benefit from the reduced CIT rates are dividends received from entities residing in Turkey, emission premiums, exemptions provided under the Act on Technology Development Zones, and allowances granted for qualifying research, development, and design activities.
• Uniform reduction rate: With the new law, a 60 percent reduction of the standard CIT rate (25 percent) is now established. This results in an effective tax rate of 10 percent (40 percent of the standard 25 percent CIT rate). Previously, the reduction rates varied significantly, ranging from 50 to 90 percent depending on the region and specific investment criteria, allowing for more tailored incentives based on regional development goals.

These amendments apply to investment incentive certificates issued on or after July 24, 2025. However, certificates granted in response to applications submitted before June 16, 2025 and that have not been rejected are exempt from these new provisions.

Pillar Two guidance published

On August 5, 2025, HMRC issued a new guidance manual on the UK Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT). The guidance provides clarifications on different aspects of the Pillar Two rules in the UK, including:

• scope provisions (e.g., excluded entities, revenue threshold test, ownership determinations, determination of entity location);
• application of Safe Harbour rules (e.g., source of data, purchase price accounting adjustments, (other) adjustments required, de-minimis threshold test, simplified effective tax rate test, routine profits test, treatment of particular types of entity, anti-arbitrage rule;
• calculation of the Effective Tax Rate (i.e., calculation of GloBE Income and Covered Taxes including, for example, pre-filing adjustments, adjustments for intra-group financing arrangements);
• calculation of Top-up Tax liability (e.g., application of the substance-based income exclusion and de-minimis exclusion);
• treatment of particular entities and adjustments (e.g., treatment of Joint Ventures);
• application of charging mechanisms (i.e., IIR, UTPR and DTT) as well as clarifications on administrative requirements.

For previous coverage on UK Pillar Two draft guidance, please refer to E-News Issue 206.

Supreme Administrative Court clarifies beneficial ownership test for royalty withholding tax

On June 25, 2025, the Supreme Administrative Court (SAC) of Czechia issued a judgment concerning the identification of the beneficial owner of royalties for treaty relief purposes. The taxpayer, a Czech company that provided television programs to consumers in Czechia, paid royalties to non-resident distribution companies. These distributors subsequently paid the royalties to program producers (also resident outside Czechia). The tax authority denied a reduced withholding tax rate under the relevant double tax treaties (DTTs) on the grounds that the taxpayer failed to prove that the payment recipients were the beneficial owners of the royalties. The regional court, and subsequently the SAC, agreed with the tax authority point of view.

Key takeaways include:

• Rejection of look-through principle: the SAC refused to apply reduced rates based on DTTs with the jurisdictions of the program producers on the grounds that no direct legal relationship existed between the Czech payer and those entities.
• Burden of proof on the payer: a simple declaration of beneficial ownership from the foreign producers was deemed insufficient by the SAC. In the court’s view, taxpayers must be able to substantiate the beneficial owner status with additional supporting evidence.
• Requirement of legal relationship: For the purpose of claiming DTT relief, the SAC confirmed that a demonstrable contractual or other legal nexus must exist between the Czech payer and the person receiving the royalty income.
• Potential WHT collection: in the SAC’s view, where beneficial ownership cannot be verified, payers may be required to withhold the domestic 15 percent WHT.

For more details, please refer to a report prepared by KPMG in Czechia. 

French Supreme Court ruling on the deductibility of forex losses under the French parent-subsidiary regime

In July 2025, the French Supreme Court (Conseil d'État) issued a ruling on the tax treatment of dividends from foreign subsidiaries with foreign exchange (forex) gains and losses, as well as interest from current account agreements.

The case concerned a French company engaged in the storage and marketing of agricultural produce and the distribution of agricultural supplies. Between 2013 and 2017, the company received dividends from its Czech subsidiary, which qualified for the French parent-subsidiary regime. Under this regime, 95 percent of dividends from qualifying subsidiaries are exempt from corporate tax, whilst five percent is taxable as representing investment maintenance costs.

Between the dividend declaration in Czechia (in CZK) and actual payment, the EUR appreciated against the CZK, resulting in a forex loss upon conversion. The company applied the parent-subsidiary regime based on the gross dividend amount stated in the resolution, adding five percent of the gross dividend to taxable profits and booking a full deduction for the forex loss.

During a tax audit covering 2013–2017, the French tax authorities challenged the application of the parent-subsidiary regime, assessing additional corporate income tax for 2014, 2015, and 2017, imposing penalties, and reducing the group’s declared losses for 2013 and 2016. The plaintiff appealed to the Montreuil Administrative Court, which, in its April 1, 2021, ruling, partially agreed with the company, overturning additional tax claims under the parent-subsidiary regime. Subsequently, in a ruling from June 28, 2023, the Paris Administrative Court upheld the dividend calculation based on the dividend amount specified in the distribution decision. However, the Paris court only allowed forex loss deductions at five percent and included interest from current account agreements as financial expenses without considering the corresponding financial income.

Following an appeal, the French Supreme Court (Conseil d'État) annulled the ruling of the Paris Administrative Court of Appeal. The Supreme Court clarified that the lower courts’ assessment of interest as financial costs was essentially legally correct. The Supreme Court took the view that the parent-subsidiary regime applies based on the dividend amount specified in the distribution resolution, and that exchange rate fluctuations between resolution and payment are irrelevant. In the Supreme Court’s view, forex losses are fully deductible, whilst profits are fully taxable. With regards to the interest from the current account agreements, the Supreme Court recognized that these constitute financial expenses and must be included in the net financial expense calculations. Moreover, in the Supreme Court’s view, the interest received from the same contracts had to be taken into account as financial income. 

German Constitutional Court decision on constitutionality of minimum taxation of loss carryforwards

On August 11, 2025, the German Federal Constitutional Court (Bundesverfassungsgericht) published decision 2 BvL 19/14, on the minimum taxation rule for corporate tax loss carryforwards.

The plaintiff was a German limited liability company, which was primarily involved in the implementation of an urban development measure and associated real estate transactions. The company incurred considerable losses due to falling property prices and a lack of demand. In the 2004 annual financial statements, receivables amounting to around EUR 44 million had to be written off in full, resulting in a net loss for the year of around EUR 46 million. With insolvency in July 2005, its business activities were discontinued and further receivables of EUR 25 million were written off in the short fiscal year. As a result, the loss carried forward rose to around EUR 72 million by the end of 2005. However, following an agreement in a legal dispute, a reversal of impairment losses of around EUR 74 million was recognized in the 2006 to 2008 balance sheets. For the tax assessment, loss carryforwards were determined for the years 2004 to 2008. However, the tax office only partially took these into account due to the minimum profit taxation requirements. According to this German regulation, only 60 percent of losses above a base amount of EUR one million may be offset. This left taxable income of around EUR 31 million for 2008, resulting in corporation tax and trade tax for the years 2006 to 2008.⁴

The insolvency administrator lodged an objection to these assessments and claimed that the minimum profit taxation was unconstitutional in the event of insolvency, as it violated the principle of equality under the German Basic Law. This argument was based on the fact that the definitive loss of unusable loss carryforwards poses a definitive effect. The tax office rejected the objections. The Berlin-Brandenburg Tax Court confirmed the tax office's opinion. It considered the minimum profit taxation to be constitutional and denied a deviating tax assessment for reasons of equity. The legislator was allowed to standardize and did not have to provide for exceptions for rare cases such as insolvencies. Following an appeal by the plaintiff, the German Federal Fiscal Court (Bundesfinanzhof) also had no constitutional objections to minimum profit taxation as a rule but expressed doubts as to whether it was compatible with the German Basic Law in cases of a definitive effect. It stated that taxpayers whose losses cannot be used definitively due to insolvency are placed in a worse position than those who can fully offset their losses in later years. The German Federal Fiscal Court considered it necessary to clarify whether this unequal treatment is objectively justified and therefore referred the question to the Federal Constitutional Court.

In its July 23, 2025 decision, the German Federal Constitutional Court ruled that the minimum profit tax is constitutional - even if a definitive effect occurs. In the Court’s view, although there is unequal treatment, this is justified by the legitimate purpose of taxing company profits promptly and simplifying tax collection. The Court took the view that loss-carryforwards are not items protected by property law, but rather a tax benefit, the scope of which the legislator is free to determine. In the Court’s view, even rare cases such as the insolvency of the plaintiff did not oblige the legislator to create an exceptional provision.

Supreme Court ruling on interest on refunds for withheld taxes on dividends

On July 9, 2025, the Portuguese Supreme Administrative Court (the Court) published Judgement 8/2025, concerning the start date of interest due on wrongly withheld taxes.

The plaintiff is a Luxembourgish Undertaking for Collective Investment in Transferable Securities (UCITS) which is resident in Luxembourg for tax purposes and has no permanent establishment in Portugal. In 2018, the UCITS received dividends from Portugal, which were subject to a 15 percent withholding tax. The plaintiff did not obtain a tax credit in its state of residence for the withholding taxes, neither under the Portugal-Luxembourg double tax treaty, nor under the internal law of the Grand Duchy of Luxembourg.

On December 30, 2019, the plaintiff filed an administrative appeal against the definitive withholding tax levied in 2017 and 2018, requesting reimbursement. The plaintiff based its plea on EU law grounds – specifically on the free movement of capital and on the fact that comparable funds that were tax resident in Portugal were not subject to any withholding tax in relation to dividends distributed to them. Whilst the appeal was unsuccessful, on October 19, 2020, a request for a declaration of the illegality of these withholdings was upheld by an underlying arbitration ruling. Under the ruling, interest was awarded from the date of the final and unappealable court decision until the unduly withheld amounts were refunded.

The plaintiff challenged the initial judgment, arguing that it was incorrect for the Portuguese tax authorities to start paying interest only after the court's final decision. The Portuguese Supreme Administrative Court agreed with the previous ruling that taxes wrongly withheld should be reimbursed to the plaintiff. Additionally, when taxes are withheld and the taxpayer disputes the tax decision, the error becomes attributable to the tax authority once the administrative appeal is rejected. This rejection date marks the beginning of the period for calculating the interest owed to the taxpayer. Consequently, the tax authority must refund the wrongly withheld taxes and pay interest starting from the date rejection of the appeal.

For more information, please refer to a report prepared by KPMG in Luxembourg.

Managing tax reporting challenges for the digital economy – Last developments

On September 3, 2025, a panel of KPMG professionals will explore last developments in the implementation of new tax reporting obligations impacting the digital economy sector.

On June 13, 2025, China implemented new tax reporting regulations for both resident and non-resident digital platform operators. These regulations require operators to provide the Chinese tax authorities (STA) with quarterly reports detailing the identity and income of the platform's users. The first reports are due by 31 October 2025. These new regulations align with global trends, including the DAC 7 requirements for digital platform reporting in the EU, and the OECD’s Model Rules for Reporting by Platform Operators.

Although there remains some uncertainty regarding how the Chinese tax authorities will utilize the collected data, it is clear that tax authorities worldwide are increasingly requesting more data from digital economy participants. In this session, KPMG Indirect Tax professionals will explore recent tax reporting developments globally and discuss potential strategies digital platform operators can adopt to navigate the evolving regulatory environment.

During this webinar, we will address the following key topics:

• The global trends in implementing tax reporting requirements as a means of enhancing tax transparency, including the new Chinese new tax reporting regulations for digital platform operators, and developments elsewhere in the world;
• What specific information must be reported under the new reporting requirements, with practical recommendations for foreign digital platforms;
• The similarities and differences between the major reporting requirements being implemented around the world, and the EU’s DAC 7 requirements and OECD’s Model rules;
• What steps digital platform operators can take now to prepare for these regulatory changes, along with potential strategies to manage the associated tax reporting challenges.

This session aims to provide you with the necessary insights to navigate the evolving tax reporting landscape effectively. We hope you can join us for this informative event.

Please access the event page to register.

Transfer pricing hot topics: US tax reform, OECD updates and public country-by-country reporting – July 30, 2025

On July 30, 2025, a panel of KPMG professionals explored US Tax Reform, OECD Updates and Public Country-by-Country Reporting.

The global tax landscape continues to evolve rapidly. In June, the G7 reached an agreement that could lead to profound changes to Pillar Two. In July, President Trump signed into law the One Big Beautiful Bill Act, making significant changes to the U.S. corporate tax system. Businesses are continuing to grapple with how to respond to EU and Australian requirements to publish their Country-by-Country Reporting (“CbCR”) data.

These are big changes which are coming fast. In this webcast, KPMG will review these developments and provide practical tips for businesses as they develop their response.

The replay of the webcast is available on the event page.

Talking tax series

With tax-related issues rising up board level agendas and developing at pace, it’s more crucial than ever to stay informed of the developments and how they may impact your business.

With each new episode, KPMG Talking Tax delves into a specific topic of interest for tax leaders, breaking down complex concepts into insights you can use, all in under five minutes. Featuring Grant Wardell-Johnson, KPMG’s Global Head of Tax Policy, the bi-weekly releases are designed to keep you ahead of the curve, empowering you with the knowledge you need to make informed decisions in the ever-changing tax landscape.

Please access the dedicated KPMG webpage to explore a wide range of subjects to help you navigate the ever-evolving world of tax.

Key links

• Visit our website for earlier editions.